Energy Transition Now - Episode 19 with Tara Schmidt

This week, we were joined by Tara Schmidt, Sustainability & ESG Finance Director, Lloyds Banking Group for a discussion on ‘Financing the Energy Transition‘.

Tara and host David Linden, discuss the role that Lloyds is and can play in the UK around funding the energy transition, a critical part of ‘getting us where we need to be’. Tara goes on to speak about how Lloyds is doubling its sustainable finance funding for corporate banking and how it wants to see ‘financed emissions’ aligned with the UK net zero target.

Discussing three key aspects of how Lloyds is supporting clients on their energy transition journeys; people, insights and collaboration and tools, Tara also speaks to a just and fair transition and the social implications that come with that.

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About Tara

Tara Schmidt

Tara Schmidt is Sustainability & ESG Finance Director at Lloyds Banking Group, supporting corporate clients in shaping and financing their net zero transition journeys. With more than 20 years of industry experience, Tara brings a wealth of expertise in global energy and infrastructure markets, climate-related financial risk, and sustainable development.

For over a decade, Tara has assisted corporate development teams in some of the world’s largest companies and financial institutions in climate-related strategic planning, business development and market analysis. Prior to joining Lloyds, she was Vice President of Strategic Planning at the global engineering and consulting company Wood plc where she was responsible for supporting the company and its clients in delivering their energy transition strategies.

Tara previously worked for the sustainability consultancy ERM, in building out their client climate strategy offering in conjunction with the G20 Task Force on Climate-related Financial Disclosures (TCFD). At the market analyst firm Wood Mackenzie, she managed Global Energy Trends research overseeing a team of global market analysts. She began her career as a petroleum engineer working for BP and Shell, and later moved into management consulting with Accenture.

David Linden Hello, everyone. I’m your host, David Linden, the Head of Energy Transition for Westwood Global Energy Group. And you’re listening to Energy Transition Now where we discuss what the transition really means for the oil & gas and the broader energy industry. For today’s episode, I have the real pleasure of speaking with Tara Schmidt, who is the Sustainability and ESG Finance Director at Lloyds Banking Group. And we’ll be talking about financing the energy transition plus a few other topics, of course. Welcome, Tara.

Tara Schmidt Thanks, David. It’s a pleasure to be here with you today.

David Linden Thank you, and thank you for taking the time out. Energy markets, obviously an exciting time right now or an interesting time, shall we say.

Tara Schmidt Yeah, absolutely. Interesting times at the moment.

David Linden So how about we start off, maybe a little bit, I think we don’t spend too long talking with people’s biographies and the companies, but I think in this instance, it really, you know, the main reason you’re on, I guess here for me was interesting just to hear the kind of role that Lloyds is taking in the role that you specifically have with the bank and the work that you do with your clients and to walk us through. Maybe that as a starting point is what is it that Lloyds is doing to help the UK reach net zero?

Tara Schmidt For those you know, I guess listening in that may not be as familiar with with Lloyds Banking Group. We are the UK’s largest commercial and retail bank, so we see that we have a key role to play in supporting the UK’s transition to net to net zero basically and supporting corporates, project developers, SMEs. When we think about the supply chain across the UK as well as consumers when we think about the affordability of the transition. My role specifically is supporting corporate and institutional clients on their net zero transition journeys and I joined Lloyds, I guess David, we’ve known each other for a wee while. I joined Lloyds, that’s the first bank that I have worked for directly in my career. I’ve been working on transition, energy transition and low carbon transition for 20 odd years now. And what I find really exciting is one the role that Lloyds can play across the UK and to the role that finance can really play around transition. My background, as you’ll know, is, you know, I’m an engineer by background. I’ve worked in market analysis and I’ve worked as a consultant. But what I’ve seen over the years is how incredibly important finance is for funding the transition in order to to really get us to where we need to be. And I guess we’ll talk a little bit more about that today, but just how important, it’s not just about government financing, but really if we’re going to get to net zero, it’s really about private finance and the role that it will play and getting us to to our target.

David Linden I think unfortunately, maybe a lot of people get excitement and an interest in news on what corporate is actually doing. But of course, they couldn’t do a lot of that without finance, essentially. And and I agree with you, I think it is really exciting to see that, but there maybe isn’t enough focussed on it. So I’m I’m very happy that we’re talking about it today. So when it comes to Lloyds specifically then, you know, you’re saying you’re the largest commercial, how do I say that, to say largest commercial bank?

Tara Schmidt Well, commercial and retail. So that’s for corporate and institutional clients, SMEs and then also retail and thinking about consumers.

David Linden OK, so you’re widespread in that sense throughout the UK economy. OK, so what is it like? What which approach you taking to that then? How do you then consider your role within that transition?

Tara Schmidt So we’ve committed basically to reduce our own financed emissions by 50 percent by 2030 and to get to net zero ourselves by 2050 or sooner. So for those listeners, that may be less familiar, you know, with the finance sector. So when we say financed emissions, that’s really where we’re lending and investing in the UK economy and wanting to see those emissions that we’re investing and financing, aligned with the UK net zero target. The other thing that we’re doing to really support, you know, those commitments is we are doubling our sustainable finance funding for corporate banking to 15 billion, over the next couple of years, as well as also in that time frame, providing 10 billion for green mortgages as well. So as I said, really thinking, you know, when we talk about energy is thinking not only about the supply side, but really thinking about the demand and all the energy uses across the UK economy, how we’re going to become more energy efficient. Thinking about things like heat in the built environment, so the bank is really thinking about our commitments across the UK economy. The other thing that we’re doing is really, you know, our approach entails really supporting our clients on their transition journeys. And I try and break that down into kind of three key aspects. One is are people, how can we support our clients? We have trained up over 1500 of my colleagues through the Cambridge Institute of Sustainability Leadership, which I believe you have been on yourself as well. And I recently attended. I worked for CISL, A in a former life as a consultant. So it’s great to see that we’re training up bankers to be able to then in our discussions with clients, really support them on their transition journeys. We’ve also launched the ESG finance team, which, as you mentioned, I’m part of. So we launched our ESG finance team back in April. There’s 16 of us that are specialists working across our coverage team. So with each of the, you know, the sectors within the bank are relationship directors that are then working with our clients as well and helping them really think about it. We know the transition journey is not an easy one to make, but you know the cost of doing nothing is much greater. So really working with them to think about, you know what’s the most effective, you know, approaches to transition journeys and making sure that we’re not just thinking about the risks, but the financial opportunities and getting to net zero. The second thing I mentioned is just around insights and collaboration. And so you find on our, you know, on our website, you know, we try to promote a lot publicly and collaborating through, you know, a number of organisations across the UK economy. So we’ve got a sustainability hub, which has a number of case studies, which I’d recommend anyone towards and also thought leadership pieces, whereas thinking not just about corporates, but I think a lot of corporate scenario thinking about Scope Three emissions, thinking about their supply chains. We are also engaging and with a number of our SME clients helping them think about how they’re going to move on to the net zero journey. And last thing I’d mention is just around tools. So there are a number of tools that we offer publicly to our clients, and I’ll tell you a bit more in detail as we get into it around some of the things that we’re developing. But if you include, you know, carbon calculator, a lot of places, you know, companies are thinking about, where do they start is really estimating their carbon footprints and then also green buildings tool. And so really thinking about how do we become much more energy efficient with the built environment?

David Linden Fantastic, we should definitely unpack some of those in just a minute. That’s a very comprehensive sort of set of things. But just so I guess someone who, maybe doesn’t follow the finance world that much when you mention things like sustainable finance or green mortgages or those things. What is it about these products? What are they effectively doing? So someone’s getting a green mortgage? Is that someone who’s essentially saying I’m attaching a KPI to this, which has some green targets or what? All these different mechanisms?

Tara Schmidt Yeah, absolutely. So it could be that its targets around transitioning. So for whom it might be around improving the EPC rating of a home or for a corporate, you know, really thinking about some of their KPIs. So if they’re setting a net zero target, well, then they could potentially get cheaper financing. So we provide discounted financing and aligning with those KPIs, or it could be based on, you know, just aligning with what green potentially means. So, you know, we’re awaiting the UK green taxonomy to be launched. We look a lot at the EU taxonomy. So really thinking about what entails, you know, what’s green and being able to to really support that potentially through, you know, ultimately cheaper money for investing and getting to net zero.

David Linden I’d like to do I guess in just a moment is unpack some of that. But you know, a key question anyone would have listening to you is OK, there’s a you know, you supporting all your different clients, you’ve got your own target, et cetera. So, OK, maybe you have a reason for doing this. But what’s kind of the overall rationale for… well essentially, you’re investing yourself quite a bit of time and effort into this. What’s driving that for Lloyds?

Tara Schmidt Yeah. Well, some folks that have been watching recent announcements might for the bank may have seen that we have a new CEO. So Charlie Nunn came on board end of last year and we’ve recently launched our new strategy, which is really reaffirming our corporate purpose and our corporate purpose is to help Britain prosper. And we’re absolutely behind that and at its core is really a focus not just on transition and net zero, which is absolutely important, but also around social inclusion and regional regeneration, what we ultimately would like to see is, you know, being able to commit and support ensuring a sustainable, resilient economic recovery for the UK. And you know, and where we can play a role abroad as well through our clients.

David Linden Very interesting about the purpose, actually. I think that’s a very interesting factor that sometimes does get overlooked. If you don’t mind me saying in the finance world, it’s not often expressed that way. So that’s fascinating. Some of the other things that are out there that people are aware of other initiatives such as well there’s the TCFD, the Net-Zero Banking Alliance, what kind of influence is that had on how you’re approaching things?

Tara Schmidt Yeah. Well, I mean, I said, you know, I joined the bank back in September, but I’ve been working with Lloyds off and on since 2017 on TCFD. And it’s been amazing to see the impact that TCFD has had. But, you know, I think the net zero banking alliance and TCFD of it have been absolute game changers. Ultimately, what it comes down to is how do we mobilise the finance that’s required to get us to net zero? And globally well, I’ll back up for a minute, I’ll just talk about COP 26. So a lot of people at COP26 heard lots of debate going on between governments saying how they were going to get the 100 billion together for, you know, the developing world around climate. But if we look at how much finance is really going to be required to get us to net zero, we’re talking hundreds of trillions of dollars to get us there globally. And here in the UK, we’re talking about up to 50 billion a year, year on year by the end of this decade. But of course, you know, we should recognise that the cost of doing nothing is actually much greater than that. And so, you know, we definitely need to invest. But where is this finance going to come from? And I think that’s where it’s really exciting. So the Net-Zero Banking Alliance is part of the Glasgow Financial Alliance for Net Zero, which represents over $130 trillion dollars in assets and from that from the financial community. So that’s from banking from the net zero banking alliance as well as across the spectrum, you know, for the financial community. So really, that’s quite exciting. That was probably the biggest announcement from COP26 as getting that amount of finance behind net zero. But the big question moving forwards is Mark Carney, who, you know, announced GFANZ and some may remember was previously the governor of Bank of England has been, you know, since the beginning with TCFD. You know, he was saying, we need to get the financial plumbing. We need to get the plumbing right in order to allow for the financial flows for net zero. So GFANZ, that 130 trillion is absolutely brilliant for financing net zero. But TCFD, so the task force on climate related financial disclosures is going to be a key enabler for helping getting the plumbing together to get the money to where it needs to go for net zero. And I should note, so you were asking particularly about the Net-Zero Banking Alliance. So that’s the banking component GFANZ. Lloyds, we were a founding member of the Net Zero Banking Alliance, and as part of that commitment, as I mentioned earlier, that, you know, our commitment then to get to net zero by 2050 and to get to 50 percent emissions reduction by 2030. So we’re thinking a lot about and TCFD, not just for ourselves, but how we engage our clients and advising them to  leverage TCFD for thinking about the cost of doing nothing and the opportunities of aligning to the transition strategy and also thinking about the technologies that are going to be required to get us there.

David Linden If I was to be a cynic and say, look, but the regulation isn’t there to force you to do this yet. Essentially, there are some aspects of it, such as the TCFD, et cetera, which allows you to think about it. But you mentioned something around the cost of doing nothing is greater. You mentioned that a couple of times so far, and that’s fascinating. Is this about banks being on the front foot, essentially recognising the risk of climate change and therefore the risk to the capital that they’re having to lend out beyond even corporates, you could argue, thinking that way or being forced to think that way through regulation and therefore saying, actually, this is really important to us because we’re going to giving out money for a longer period of time here and we need to feel it’s secure. So from a risk management perspective, as such, that’s really the core driver here is that a fair summary of my simplifying it too much?

Tara Schmidt Yeah, no. I mean, absolutely. I mean, we’ve been on this journey. So TCFD was launched back in 2017, you know, and you know, many banks, including Lloyds, you know, we’ve been on the journey to identify the cost, you know, the costs and the risk around the transition and the cost of doing nothing really understanding the physical climate impacts the policy, impacts consumer shifts, markets, technology and really understanding that. And as you’ll be aware, you know, we’ve recently, across the banking community for the UK have recently undergone stress testing, so seabeds as its terms really understanding how resilient our own financial portfolio is to that. So that is certainly one aspect and part of the reason we’ve committed, you know, to net zero. And what we want to do is recognise those financial risks and opportunities, engage with our clients to ensure a more resilient economy moving forward.

David Linden But I guess for you, what I really liked was also the help in getting Britain prosper aspects, which is the sort of social inclusion and regional side of things. And while a lot of focus, I think you and I talked about this before, a lot of the focus is on there that call it the climate risk, which can either be the physical cost of it, shall we say, or the carbon focus. The broader picture isn’t always included as a headline as such. Is that a fair, a fair thing to say as well?

Tara Schmidt Yeah. And I guess you know what, we’ve been talking a lot about and you’ll probably hear me banging on about it is it’s not just about counting carbon, you know, carbon is important. And you know, we have to reduce our carbon emissions in order to avert the worst impacts of physical climate change. But you know, as I mentioned earlier, we’re thinking about a just and fair transition. So really thinking about the social implications. So as part of the work that we’re doing in the bag around net zero transition, understanding where we can invest from a regional regeneration perspective, where there is jobs impact and benefits, thinking about the affordability of getting to net zero and really understanding this in a much more holistic fashion. Carbon, yes, is important, but we need to think about this in terms of a resilient, prosperous economy, moving forwards and the opportunities that net zero presents not just about cutting carbon, but about making it a greener future for us all.

David Linden You started to mention some of these as we go through. I wanted to ask you about those, those tools are such that you mentioned right there. There are approaches that you can take to help clients. You know, you mentioned the carbon footprint calculator, for example. You know, that’s the first step just to get people thinking about what impact they’re having and how they can. How can deal with that? Can you maybe just talk us through one or two, whether it’s your favourites or whether the ones that you think they’re having the most impact right now? So the tools that you’re using with clients just to give us a sense of how that’s working for them and what it means as a result of using those tools?

Tara Schmidt Yeah. Well, I mentioned a few tools that help with really getting a baseline. So carbon calculator tool, green buildings tool, so you can understand more about the investments, you know, that that may be required. But really, I think where we’re headed and we’re really focussing on is one, ensuring credible transition plans. And I’ll talk a little bit about some of the tools that we leverage within that space incredible transition plans that really will get us to net zero and then to around the investment opportunities on the net zero technologies that really are going to be required. You know, we know there’s going to there’s a lot of technologies out there, but they need to be upscaled if we’re really going to be able to cut our carbon emissions to net zero by 2050. So on credible transition plans, there’s a few ways we look at that. I mean, TCFD certainly is becoming front and centre. You mentioned that it’s not mandatory as of yet, but as of, oh, two to three days time, it will become mandatory for a number of companies across the UK. So any company that it has over 500 employees and 500 million pounds of turnover will have to start thinking about sustainability disclosure requirements, which includes TCFD as part of that. So that is going to become mandated.

David Linden Good point. And by the time people are listening to this, actually, because we’re calling it, as you say, a few days before April, then people will certainly be seeing that’s mandatory. So sorry, go ahead.

Tara Schmidt Yeah, so TCFD is a good place to start. And you know, TCFD isn’t just a disclosure and tool, it is actually a sustainability strategy framework for thinking about net zero. So it’s really useful. We use it a lot with our clients. Make sure when they’re aware of TCFD, what’s coming, but then also thinking about how we can leverage that for those KPIs we talked about and, you know, thinking about financing off of TCFD. The other thing we look at is science based targets. So hopefully most everyone knows about science based targets, but basically setting those targets that are committing to net zero, the tool that we use around that, you know, we’re looking a lot at is the transition pathway initiative. So I’ve been talking about that a lot since COP26, but it’s a really brilliant framework for companies to basically look at how to get from tier one up to top tier, and you know, what are the steps they need to undertake to really get to that kind of gold standard? But really, that’s thinking about the cost of doing nothing, thinking about, you know, measuring the carbon footprint to start and setting a pathway on how they’re going to, you know, really commercially viable action plan for how they’re going to reduce their carbon emissions. And then the other thing that we’re really working on in terms of the tool is net zero origination. So I think you and I were talking about this before. We’re basically proactively considering all the technologies that are going to be required to get the UK to net zero. That’s about 14 technology themes that we’re looking at with, you know, five, six seven technologies under each of those. But really understanding more from a banking perspective, how can we advance funding and financing to get these technologies to the scale that’s going to be required for the UK to get to net zero? And that’s not just an academic exercise per say, but it’s really in terms of collaborating with our clients, understanding, you know, those innovators in the UK economy that really want to invest in net zero and get those technologies up to scale for what we need. And that’s across everything from industry, transport, energy supply, built environment, you name it, and know we’re really proactively considering how we can support that.

David Linden It’s a really interesting debate going on at the moment in the market, I think around offsets. Now, I don’t know if this particular stance that Lloyds has on this, or if there’s a personal view that you share on this Tara or not. But you know, when you talk about the pathways to get to net zero, when you talk about science-based targets, you know, the original iteration of science based targets, you weren’t allowed to use offsets to get to zero, as such. I believe, there’s a new iteration now that doesn’t allow it in that sense, but certain qualities of offsets and some people go, you know, different colours on whether it’s the right thing at all or not for the for any industry as such we do. But it’s I guess it’s particularly pertinent for the oil and gas industry and other sort of industries that are, you know, high carbon contributors. So what where does the where does the bank sit on sort of offsets and what should we be thinking about when we look at offsets?

Tara Schmidt Yeah, I mean, there’s a lot of discussion going on in the bank and at the moment on this topic, as I expect in many financial institutions around the world, especially in light of COP26 and the voluntary carbon markets as well, and really thinking about the integrity and quality of that. I think, you know, I can’t say so much on the bank as of yet because we’re still under discussion. So I’ll just say in terms of my personal view, but if we look at the science based target initiative, it is very clear that we shouldn’t be using carbon offsets as an excuse to not reduce our emissions to get to net zero. But that said, is there an opportunity rather than saying either or. And can we say “and”, and in terms of can we be looking at carbon offsets today and also ensure that we’re getting to net zero and truly reducing emissions? And that’s certainly something that I’m very curious about, and I think there’s some brilliant work being done around rating the carbon offsets, getting the right integrity in place so that, you know, we’re not double counting for instance, but we’re really starting to tackle reducing some of our emissions today because what’s in my head, david, I’m sure you were reading as well being passionate on sustainability, is you know, we look at the Arctic and the Antarctic at the moment. I mean, it’s incredible to see the temperature rises. We need to start acting now and making sure that we’re getting tangible action plans in to get us to net zero. So I would say carbon offsets certainly could be part of that solution as long as we’re not using it as an excuse for not getting to where we need to be, be there for net zero.

David Linden Absolutely, absolutely. And the more you look into a subject like that, that’s obviously open to interpretation, you know, you talk about the regulatory side of things as well again. Mark Carney seems to be involved with some of these things as well, et cetera, et cetera. So there is a lot of work to do in that space, and it’s probably a whole podcast in itself. But I guess, you know, banks also need to consider that whether it’s going to be part of how they think their clients should be getting to net zero if they indeed trying to get that. But yes, as you say, probably for another, time.

Tara Schmidt They do a whole podcast on that, David.

David Linden You know, obviously I have a slight bias here. I’m interested in particularly in the energy sector itself, a lot of what you’re saying, it makes a lot of sense. I sit in the UK, you sit in the UK and look at what we’re trying to achieve is a lot of debate going on at the moment as to what should happen, we can maybe touch on that in just a second. But ultimately, if I think about the impact of all of that on the energy sector. In the bluntest of senses, does this ultimately mean that a company who’s saying I’m going to produce renewable energy gets a better deal than somebody who’s saying, actually, I want to continue producing oil and gas on working with someone like yourselves, and you’re obviously not the only one as a whole as you say, Net-Zero Banking Alliance and other groups that are committing to it to helping economies reach net zero. And does someone get a rougher deal out of it because of the industry that they’re in, I guess, is the simplest word to use here? Or is there a slightly different, sort of more nuanced approach to it?

Tara Schmidt Well, I mean, the first thing I’d say and we recognise this in the bank that in order to get to net zero, it’s going to require an entire rewiring of our economy. As you might have heard from CISL, they’ve done a lot of work on this as well. And that means we have to decarbonise all sectors right, spanning energy supply and energy demand. And that includes power, yes, for renewables and so on and what we can electrify, there’s a whole question on that. But also industry, transport, heat, you know, the built environment. So we are looking across all sectors and oil and gas included and the role that they can play. And we do have green financing options, but we also have, you know, I think the big topic we’re hearing a lot about at the moment is ESG linked lending. So that’s basically a new strategy to hint at this earlier. So you might have been thinking about that already, but and you know, that’s basically where companies commit to ambitious targets. You know, a set of KPIs basically to become more sustainable and resilient. And in return, then they have the opportunities for cheaper financing to help support their own transition plans. And that can cover the ‘E’, but you know, the environmental angle, so thinking about net zero, but it can also cover the ‘S’, the social aspects around a just and fair transition as well as governance. So there are certainly opportunities across all energy sectors. The one thing, though, I would say, is, of course, as I mentioned earlier, they need to be credible transition plans that are really going to support the UK and getting to its net zero target.

David Linden That makes a lot of sense, and I think there’s obviously a company to be called different things or ones that are maybe greening and others that are simply saying we’re compatible to what’s going on. So I guess, as you say, there’s a nuance there. And certainly in Lloyds case, it’s about having a credible plan to get to a place where it can be compatible with the future of net zero economy that we’re looking to achieve.

Tara Schmidt Yeah, I was just going to add one more thing to that. And so, you know, I think the other thing I just flag is we are, in addition to looking at the reduction of our financed emissions by 50 percent by 2030 or, you know, as part of the Net Zero Baking Alliance, we’re spelling that out sector by sector. So we’ve made clear commitments, you know, both to the power sector and to the oil and gas sector of reducing our financed emissions by 50 percent by 2030. So that is certainly part of that credible transition plan that we’re looking at as we engage with our energy clients, but we’re also there to support them. So we’ve got clients saying, yes, I want to commit, but how do I go about doing this? You know, we are advising our clients on that. We are also supporting, you know, thinking about these technologies that, “Well I’m a smaller company. How could I invest in that?”, well, let’s think about it. There may be opportunities here where you could collaborate. And as a bank, we’re looking across the entire UK economy where we can start to help our clients think a bit differently on the role that they potentially could play around net zero.

David Linden No, super very interesting in terms of though… there’s a lot of things as so very briefly mentioned, at the start, there’s a lot of things going on at the moment, and obviously there’s always a time lag in the recording when things aren’t recorded when they get published, that something might happen in a few weeks or so, that if we record and publish. But essentially right now, we’re in a situation where, particularly in Europe and the UK, specifically, the discussion that’s going on around energy markets is I think it’s a bit complex, full of hyperbole around what we’re going to do next and how we’re going to do them. So, you know, no one, I don’t think has the answer right now, but is it, you know, be great if just to get your views around what things you have started to see change if you can, or where you think some of the changes are going to come around, whether it be, you know, in terms of our energy strategies going forward. But realistically, you know, what’s the implications of that for the industry and therefore also for banks and how they need to think about finance going forward?

Tara Schmidt Yeah. Thanks, David. Yeah, I mean, there’s a lot going on in the market at the moment. I mean, I think front and centre is the tragic, you know, Russian invasion of Ukraine. You know, and the impact that it has had. But I think from an ESG perspective, there have been a lot of signals really since COP26 since the last few hours of COP26 on how we need to think differently about the net zero transition. You know, and to my point, I think there’s been a clear call from society that counting carbon is important, but we need to think much more holistically back to probably the very beginning of when we first started talking about sustainable development. You know, I think to the last few hours of the COP26 conference and India, you know, those tragic moments where Alok Sharma just basically breaks down because India says they couldn’t commit to phasing out coal because of their sustainable development goals. And you and you look at and particularly out of COVID, how difficult it’s been and thinking about trying to reduce energy consumption. So I think, you know, it was very clear and the UN has stated this is really thinking about a just and fair transition and thinking about the Sustainable Development Goals. And then I think also out of COVID and Ukraine, certainly, I mean, we’re seeing massive inflationary pressures, questions on energy security. How do we, you know, maybe less so and more and Europe get off Russian oil and gas. And, you know, as part of the tragic consequences in Ukraine. And I think ultimately this all just leads to thinking about a holistic view on sustainable development. And I think you might remember we were talking before about the energy trilemma. We talked about that years ago, but I think it’s come back, front and centre, the energy trilemma. We’ve talked more and more about a just transition. So thinking about the environmental aspects and the social aspects, if I think about here in the UK, places like Aberdeen, you know, how do we ensure economic, you know, positive impact and jobs creation from net zero and the industrial clusters, but it’s becoming very clear we have to think holistically also on energy security?

David Linden Absolutely. And what’s interesting to me is this in some ways as the healthy and unhealthy debate going on because each side is, if I call them sides, is pulling and pushing against each other right now, whether we should speed up deployment of renewables or in the UK nuclear, for example, or in the case of the oil and gas industry, we should we should produce more oil and gas. And it’s, you know, each one’s right in one way or another. And that balance still needs to be struck. But you’re right, the middle bit’s kind of missing there that, as you say, the trilemmas come very much in one of the tries. It hasn’t gone through all three of them. And how do we rebalance that? It’s not an easy political thing to do, let alone a challenge to try and solve technically commercially or any of those sorts of things.

Tara Schmidt Yeah. And I think there’s going to be trade-offs. I mean, even the most sustainable technologies have trade-offs. But I think the world has certainly moved on from when we first started talking about energy trilemma, like what was a decade ago. I’m sure you remember you and I worked together. But I mean, it certainly moved on, and it’s interesting to watch now. And you know, some of the thinking around energy trilemma. I started my career 20 odd years ago looking at low carbon technologies, you know, for BP and beyond petroleum the first time around. And it’s amazing to see, you know, over the years and especially the last few years, just how some of these technologies really can get us to net zero, how quickly costs are coming down and the viability of that, and I think we do need to keep that in mind. I think the other thing worth keeping in mind on these trade-offs now is how clear climate science is. You know, we see some of these tragic, you know, geopolitical, you know, challenges unfolding and war. And you know, if you look at the climate scenarios, a lot more of that could happen in the future. And you may be aware, I mean, the UK military, the U.S. military are starting to take this into account. So I think when we think about energy security, we need to think about this not just in the short term and getting to the fixes, but making sure that we’re moving fast enough. And before those as you and I spoken about before the tragedies on the horizon of what could really happen and making sure that we’re thinking holistically on the trade offs, and to be able to invest where we need to invest to mitigate that.

David Linden OK, Tara, lots of things to think about, but also a lot of opportunity to take that for, you know, I really like, you know what Lloyds, what you guys are doing in terms of supporting that. That’s I think, in the right spirit, as much as the, well the opportunity that net zero economy can present. So I think that’s a very positive thing to be thinking about. And yes, that may evolve a little bit as you go through, but really, thank you for sharing that with us and taking the time to do that.

Tara Schmidt Thanks, David. It’s been a pleasure chatting with you.

David Linden Perfect and thanks hope everyone else, enjoyed listening to it as well. Please share it with your friends, give us a good rating and subscribe. Talk to you next time.

 

 

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